Britain’s Prudential Regulation Authority (PRA) has issued a new scheme to protect Britain’s banking system from the sometimes substandard regulatory practices of non EU banks. Asset management services of foreign banks now operating in the UK now account for some £2.4 trillion. If foreign banks wish to continue operating in the UK they must adhere to the PRA’s new agenda, which will hold all foreign banks to regulate themselves to British standards. Previously foreign banks have been regulated by watchdogs in their country of origin.
This is a wise decision, but not an altogether timely one. Industry opinion sees this as a move to ensure there’s no repeat of the banking catastrophes that struck Iceland in 2008, which required British intervention to reach a resolution for account holders.
With this as the primary objective for the new agenda, the PRA has demanded that banks with a poor history of self-regulation submit in-depth information regarding their affairs. If this information shows that international banks are not meeting British standards and may damage the British economy during this period of recovery then many may be forced to close their UK operations by The Bank of England.
Whilst these protective measures may appear to limit the foreign banking activities in the UK, it’s hoped that the Britain’s high security levels may entice more business from more reputable foreign banks. As arguably the financial capital of the world it is up to London to set the standard for responsible banking regulation. Transparency has been the main aim of UK banking since the crash in 2008, and these measures look to maintain industry stability and continue the UK’s financial recovery.